Raj Mishra, 45, a senior executive working in a multinational BPO firm in Gurgaon was diagnosed with generalized anxiety disorder — caused by excessive and unrealistic worry and tension — around midnight last month. He was immediately rushed to a hospital closest to his office and was admitted there. However, he got the real shock when his health insurance company refused to provide cashless claim facility. Although his mediclaim had clearly mentioned cashless claim but he felt cheated when the company refused this facility when he needed it the most. His family members had to foot the hospitalization bill amounting to Rs 15,000.

Later, after being discharged from the hospital, Raj contacted his insurer and enquired about the reasons for cashless denial. The company executive said the hospital he was admitted in was a non-network hospital and therefore he was not entitled to cashless facility.

There is absolutely no reason to not have a health insurance cover, but timely understanding of the process is much better than a belated realization. After buying a health insurance policy many policy holders, like Raj, relax under the false assumption that everything would be taken care by the insurer and they need not pay at the time of making claim. But the penny drops when the insurer refuses to provide cashless treatment facility.

The reason lies in incomplete understanding of the policy. More so, the various pre-conditions that health insurance companies attach with the policy for availing cashless facility. Let’s see how to make the most of the cashless claim facility and how to ensure you get hassle- free facility when you need it the most.

Let’s first understand what a cashless facility is all about. As the name suggests, under cashless facility all medical expenses incurred during treatment (except for expenses beyond the sum assured and/or beyond the terms and conditions of the policy) are directly settled by the health insurance provider with the hospital.

The process is simple: Fill up the pre-authorization form after being admitted in the hospital and the treatment begins. When the treatment is over, fill up the claim form which is forwarded by the hospital to the insurer along with the required documents such as bills for hospitalization charges including diagnostic tests, discharge summary and policy holder’s ID proof.

Upon receiving these documents, the insurer settles the bill. In many cases, the process is facilitated by a Third Party Administrator (TPA) — an intermediary between the insurer and the hospital. However, some insurers have their own in-house team to handle all health insurance cashless claim processes. In this case, you’ll just have to contact the insurer directly.

Devil is in the detail

One of the major benefits of cashless facility is that it facilitates easier and smooth settlement of hospital expenses, as opposed to reimbursement method where the policyholder has to first shell out for hospitalization expenses and get them reimbursed later from the insurer.

However, things are not as simple as they appear as there are various pre-conditions that health insurance companies attach with the policy for availing cashless facility. Pre-authorisation does not guarantee that all costs and expenses will be covered by the insurer. For instance, cashless facility is offered only in network hospitals or the hospitals the insurer has tie-up with. This means if you land up in a hospital which is a non-network hospital, you will have to pay all the bills from your own pocket first which you can claim for reimbursement from the insurer by submitting all original bills. Here again, most health insurance companies do not reimburse 100 per cent of the hospitalization expenses, but only upto 80% of the entire treatment cost. ​​​​​​

Secondly, not all hospitalization costs are covered under cashless facility and most insurers entertain only admissible charges such as room rent, doctor, nursing, diagnostics related to treatment etc and non-admissible charges are excluded from the cover.

As Adhil Shetty, CEO, BankBazaar.com says, “Non-admissible charges such as telephone calls, electricity charge, cleaning charge etc are not covered under the cashless facility. All charges related to non-medication are generally included into non-admissible overheads.”

Non-admissible charges are typically for spends on items not directly linked with the treatment. IRDA has listed 199 expenses related to hospitalization which are generally excluded. These are non-medical expenses such as service charges, administration charges, registration charges, private nurse expenses, telephone calls, laundry charges, etc. So check out those expenses which fall under non-admissible charges to ensure hassle-free cashless claim settlement.

Also, some health insurance companies don’t provide cashless facility if the policyholder, who has taken personal accident policy, is hospitalized due to accidental injury.

Bare All While Buying

If the cashless claim is denied by the insurer or the TPA, it doesn’t necessarily mean the claim has been repudiated. The denial of cashless facility could be because of various factors such as failure to obtain pre-authorization; treatment outside network hospitals and policyholder crossing the age limit, among others.

It’s true that an insurer or a hospital can deny cashless facility to a policyholder on any ground even though this facility has been provided. It cannot however deny cashless facility to a policy holder if the details are duly filed and within the policy terms.

Therefore, it is important to make sure that the disease, for which one is hospitalised, is covered under the policy and other terms and conditions specified under cashless facility are met.

“Most health insurance policies typically have standard pre-conditions defined, these include pre-existing conditions, initial waiting periods etc. When a request for authorization for cashless claims reaches the insurer the insurer will verify that all the pre-conditions of the policy are met,” maintains Gagan Bhalla, Director (Development and Strategy), Max Bupa Health Insurance.

Likewise it’s not a prudent decision to hide or disclose incomplete details about your health when buying a health cover. The insurer can deny cashless facility or even can repudiate your claim citing false or partial disclosure regarding your health.

As Bhalla maintains, “Customers are required to correctly declare pre-existing diseases at the time of buying the policy as a non-disclosure detected at the point of requesting a cashless claim or filing for a reimbursement claim may lead to delay or denial.  To ensure that cashless facility is not rejected, I urge the consumers to read the policy documents correctly before purchasing a policy and share accurate details.”

TPA or Insurer?

Another important way to ensure hassle-free cashless claim settlement is to find out whether the cashless facility is provided by a TPA or the insurer directly.

TPAs typically act as an intermediary between the insurer and the hospital. Therefore, before purchasing a policy it is prudent to check if the claims would be routed through the TPA or in-house servicing team as the latter typically translates into better customer services and potentially in lesser time frames on cashless pre-authorization approvals and allows smooth functioning in terms of documentation by interacting directly with the hospital.

“If the insurer settles the claim directly then the chances of dispute is very less however in case of TPA there are higher chances of disputes, settlement delay or authorization problem,” adds Shetty of BankBazaar.com.

Cashless facility is applicable to both planned and emergency hospitalization. However, in order to ensure the pre-authorization approval can be done well in advance, make sure to inform the insurer or TPA at least 3 days prior to hospitalization in case of a planned hospitalization. On the other hand, in case of an emergency, the insurer needs to be informed within 24 hours of hospitalisation.